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Free Questions › CFA › Economics
Free CFA Economics Practice Questions & Answers
2,050 exam-style Economics questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.
100% free · No login to startQuestion 121
A country with declining immigration will likely experience:
Select an option first.
Correct answer: A — Slower labor force growth
Explanation: A is correct: Less immigration → fewer new workers. B/C/D contradict demographic logic.
Question 122
Immigration can offset aging population effects because:
Select an option first.
Correct answer: A — Immigrants tend to be younger
Explanation: A is correct: Younger immigrants → more workers → support aging societies. B/C/D are incorrect.
Question 123
A country with strong immigration but low participation rates may still have weak growth because:
Select an option first.
Correct answer: A — Not all immigrants enter the labor force
Explanation: A is correct: Immigration boosts population, but growth requires participation. B/C/D are not inherent outcomes.
Question 124
Net migration contributes to labor supply growth when:
Select an option first.
Correct answer: A — More people enter the country than leave
Explanation: A is correct: Net inflow → more workers. B/C/D reduce labor supply or are unrelated.
Question 125
Total labor input increases when:
Select an option first.
Correct answer: A — Average hours worked rise
Explanation: A is correct: Labor input = workers × hours worked. B/C/D reduce labor input.
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Question 126
A decline in average hours worked reduces potential output unless:
Select an option first.
Correct answer: A — Productivity per hour rises
Explanation: A is correct: Higher productivity can offset fewer hours. B/C/D do not offset reduced labor input.
Question 127
A country with long working hours but low productivity per hour will likely benefit from:
Select an option first.
Correct answer: A — Productivity improvements
Explanation: A is correct: Productivity matters more than hours alone. B/C/D worsen output.
Question 128
A reduction in average hours worked may reflect:
Select an option first.
Correct answer: A — Higher income levels and lifestyle choices
Explanation: A is correct: Wealthier societies often choose more leisure. B/C/D are not the primary explanation.
Question 129
A country with rising hours worked but stagnant output per worker is experiencing:
Select an option first.
Correct answer: A — Weak productivity growth
Explanation: A is correct: More hours but no output gain → productivity is flat. B/C/D contradict the scenario.
Question 130
ICT capital boosts productivity because:
Select an option first.
Correct answer: A — It improves information flow and efficiency
Explanation: A is correct: ICT improves coordination, speed, and accuracy. B/C/D are incorrect.
Question 131
A country with strong ICT investment but weak human capital may experience:
Select an option first.
Correct answer: A — Lower productivity gains
Explanation: A is correct: ICT requires skilled workers to use it effectively. B/C/D contradict growth theory.
Question 132
Non‑ICT capital contributes to growth by:
Select an option first.
Correct answer: A — Expanding physical production capacity
Explanation: A is correct: Machinery, buildings, and equipment increase output capacity. B/C/D are incorrect.
Question 133
Strong public infrastructure increases productivity because:
Select an option first.
Correct answer: A — It reduces transportation and transaction costs
Explanation: A is correct: Efficient infrastructure improves economic efficiency. B/C/D are incorrect.
Question 134
A country with poor infrastructure may experience:
Select an option first.
Correct answer: A — Higher production costs
Explanation: A is correct: Poor infrastructure → delays, inefficiencies → higher costs. B/C/D contradict economic logic.
Question 135
Public infrastructure investment is most effective when:
Select an option first.
Correct answer: A — It complements private capital
Explanation: A is correct: Infrastructure + private capital → higher productivity. B/C/D reduce growth.
Question 136
A country with strong infrastructure but weak technology may still struggle because:
Select an option first.
Correct answer: A — Technology drives long‑term productivity
Explanation: A is correct: Infrastructure helps, but technology is essential for sustained growth. B/C/D are incorrect.
Question 137
Total factor productivity (TFP) increases when:
Select an option first.
Correct answer: A — The economy uses inputs more efficiently
Explanation: A is correct: TFP = efficiency of combining labor and capital. B/C increase inputs, not efficiency. D is unrelated.
Question 138
A rise in TFP shifts the production function:
Select an option first.
Correct answer: A — Upward
Explanation: A is correct: Higher TFP → more output at every input level. B/C/D contradict productivity theory.
Question 139
TFP growth is most closely associated with:
Select an option first.
Correct answer: A — Innovation and better production methods
Explanation: A is correct: TFP reflects technology, innovation, efficiency. B/C/D do not raise TFP.
Question 140
A country with rising TFP but stagnant capital stock will likely experience:
Select an option first.
Correct answer: A — Higher output per worker
Explanation: A is correct: TFP boosts productivity even without more capital. B/C/D contradict TFP effects.
Question 141
TFP growth can offset diminishing returns to capital because:
Select an option first.
Correct answer: A — It raises the marginal product of capital
Explanation: A is correct: Better technology makes capital more productive. B/C/D do not affect diminishing returns.
Question 142
Public infrastructure investment increases potential GDP by:
Select an option first.
Correct answer: A — Reducing production bottlenecks
Explanation: A is correct: Infrastructure improves efficiency and lowers costs. B/C/D reduce growth.
Question 143
Poor infrastructure slows economic growth because:
Select an option first.
Correct answer: A — Transportation and logistics become inefficient
Explanation: A is correct: Inefficiencies raise costs and reduce productivity. B/C/D do not explain slower growth.
Question 144
Public infrastructure is most complementary to:
Select an option first.
Correct answer: A — Private capital
Explanation: A is correct: Infrastructure enhances productivity of private capital. B/C/D are not the primary complement.
Question 145
A country with strong infrastructure but weak institutions may still grow slowly because:
Select an option first.
Correct answer: A — Institutions affect incentives and investment
Explanation: A is correct: Weak institutions reduce investment and productivity. B/C/D are incorrect.
Question 146
Infrastructure investment has the highest return when:
Select an option first.
Correct answer: A — Existing infrastructure is poor
Explanation: A is correct: Low baseline → high marginal gains. B/C/D reduce returns.
Question 147
In growth accounting, TFP captures:
Select an option first.
Correct answer: A — Efficiency improvements
Explanation: A is correct: TFP = efficiency, innovation, technology. B/C/D are inputs, not efficiency.
Question 148
If capital grows 3%, labor grows 1%, and TFP grows 2%, potential GDP growth is:
Select an option first.
Correct answer: A — Higher than 3%
Explanation: A is correct: All three components contribute positively. B/C/D contradict the data.
Question 149
A country with strong labor growth but weak TFP growth will experience:
Select an option first.
Correct answer: A — Moderate GDP growth but weak productivity growth
Explanation: A is correct: More workers → GDP rises; low TFP → weak productivity. B/C/D contradict the scenario.
Question 150
Growth accounting helps identify:
Select an option first.
Correct answer: A — Whether growth is driven by inputs or efficiency
Explanation: A is correct: It decomposes growth sources. B/C/D are unrelated.
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